Swedish Innovation System: Linking the public & private

Prof. Maureen McKelveyChalmers University of Technology

Why need to link them?• Innovation involves public & private actors.

• Innovation Ecosystem figure links input to output through ’interaction fields’, involving both actors.

• Improving interaction require both abstract and directly useful knowledge, to improve choices such as to promote sustainability– Not only science, engineering but also business,

consumer,user knowledge

1. Sweden• Stockholm

• Göteborg

• Malmö | Lund

• University towns: Karlskrona, Linköping, Luleå, Norrköping, Umeå, Uppsala, Västerås, Växjö, Örebro

Societal characteristics

• Small country, fairly homogeneous• Population: 9 million people• Land mass:

– About size of California– One of largest European countries in land

• Social welfare: – Free education, inexpensive daycare, high taxes

• Representative democracy + monarchy

Exports of Goods 2004, %

Source: SCB

Transport equipment15.2%

Mineral products, fuel13,3%

Chemical products12.1%

Wood, pulp & paper12,2%

Mechanicalengineering15.2%

Electric & electronicequipment15,5%

Foodstuffs3.4%

Other engineering products5.4%

Other goods7,7%

Sweden represents:

• High income country • Small population =

small home market• Economy depends

heavily upon large, globalized multinational corporations

2. Traditionally see R&D paid by:• Governments

– Pay for public R&D because society benefits– Basic science (some development)– New fields, industries are created

• Firms– Pay for private R&D because believe returns

to their company– Development work (some research)– Of direct relevance; sometimes longer term

R&D as % GDP, country

Sweden: Two opposing voices

• ’Best in world’– Policy discourse – This is the knowledge

society come true. Look at R&D as GDP, citations, productivity in the university system.

• ‘Local moaning’ (at universities)– Individual view – This is a dehumanizing

system. We have no money for research & too many students.

Country differences by financing (2003)

30.5%61.6%2.1%OECD average

31.2%63.1%2.6%USA

21%71.9%4.1%Sweden

% financed by public

% financed by industry

% GDP into R&D

Sweden: public-private effortsPublic Policy R&D:• Only average spender on

public financed R&D• Stimulate networks and

communication• Experiment with types –

basic science, mission oriented, industrial relevant

• Experiment with public-private interactions

Private efforts (firms):• Firms spend much on

R&D• Mainly in sectors where

Sweden exports• Highly concentrated to

the 10 largest firms –Ericsson, Volvo, AstraZeneca, etc.

3. Today’s challenges set within broader societal changes

Historically, an agricultural society– Poor, perifery of Europe– One of fastest growing economies, 1850-1970

Corporatist social welfare model, where government – employers – labour unions:

1) Increased mobility of workers2) Developed standardized pay scales3) Developed welfare state, including ’safety net’

(unemployment benefits)

By 1990s, Sweden faced:1) Collapse of Swedish model’s power2) Downturn for consensual decision-making3) Problem of governance (more diversified)4) Problem of responsibility for decisions5) New economic paradigm (markets)6) New political actors7) Globalization (less focus on ’Swedish’)8) Policy to act faster, more overlap

VINNOVA report, 2006

Ministry inititaive: Innovative Sweden (2004)

• ’Our vision is for Sweden to be Europe’s most competitive, dynamic and knowledge-based economy, and thus one of the world’s most attractive countries for investment by large and small knowledge-based enterprises. World-leading knowledge will flourish in a number of priority research areas...’

4. Improving Swedish innovation system requires more debate on:

How and why innovation policy has to reach beyond mandates of government.

ANDWhat industry does matters for the country –

but what can the country do that matters to industry?

Debate whether public policy reaches relevant stakeholders.

1) Start-up, innovation and growth in SMEs

=> Not focus on MNCs

2) Improve supply, use, mobility of human resources

=> Rapidly expand higher education

3) New regimes for user-producer public-private partnerships

=> Try stimulate through demand / biofuels

4) Increase mission oriented researchÞ Larger groupsÞ Encourage groups to

interact wtih firms and with less ’basic science’focus

Debate if the problem is university-industry interaction.

Opinion on patenting research results

0.0%5.0%

10.0%15.0%20.0%25.0%30.0%35.0%

VeryNegative

Negative SlightlyNegative

Neutral SlightlyPositive

Positive VeryPositive

Personal Opinion

Predominant view of their researchgroup

Debate the impact of the trend break, decreasing total R&D in Sweden.

-10-505

1015202530

1989-91

93-95 97-99 2001-2003

3-D Column 1

Where the R&D decrease is primarily in firms (företag)

And if can impact firm strategyMNCs • No longer do as much R&D in Sweden: Pharmacia

(Upjohn, Pfizer)• Have a global R&D strategies, with centers• Are often foriegn owned: Volvo, Saab, AstraZeneca• Are no longer able to cover all technologies &

standards: Serious reductions in R&D• Are changing their in-house R&D model: More

interaction, less in-house R&D• Have benefited from stringent sustainability regulation

in past: Are they prepared to do so in future?

New view needed:Innovation is a future potential:

• Training people to think in new ways (new ideas, solve new problems)

• Keeping options open –What other ways can you solve the problem?

• Making new options possible – Are there new techniques, products, processes that society will purchase?